Review Transfer 2009-0142 (Law No. 27 August 27, 2009)

Whether the non-business land is excluded in case of transfer of land by consultation with the Special Metropolitan City Mayor, etc.

In cases where the owner of a site for an urban planning facility project transfers land by consultation to the Special Metropolitan City Mayor, etc. after a long-term urban planning facility project is not implemented, regardless of the application of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, the provisions

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 99,219,560 for the Plaintiff on May 6, 2009 shall be revoked.

1. Details of the disposition;

A. On January 16, 1968, the Mayor of Seoul Special Metropolitan City determined urban planning facilities with the content of installing BB City Natural Park in areas including BB Adong, etc., and the Seoul BB-Gu AB-dong 598-258 large scale 797 square meters are included in the site of the said urban planning facilities.

B. On June 20, 1996, the Plaintiff acquired and owned 264 square meters among the above AAdong 598-258 large 797 square meters (hereinafter “the instant land”) and transferred the instant land to Seoul Special Metropolitan City on August 7, 2008 upon receiving a request for purchase under Article 47 of the National Land Planning and Utilization Act.

C. On August 21, 2008, the Plaintiff filed a return to the Defendant on August 21, 2008 by applying the general progressive tax rate (36%) to the transfer income amount calculated by applying the actual transaction value (transfer value of 569,580,000, acquisition value of 319,421,49) to the transfer income amount.

D. However, on May 6, 2009, the Defendant: (a) deemed the instant land as land for non-business use and excluded the special deduction for long-term possession; (b) calculated capital gains tax again by applying 60% of the heavy tax rate; and (c) issued the instant disposition to correct and notify the Plaintiff of capital gains tax of KRW 99,219,560 for the year 2008.

[Ground of recognition] Facts without dispute, Gap I, Eul evidence 2, Eul evidence 1 to 7, the purport of the whole pleadings

2. Whether the disposition of this case is legitimate

A. The plaintiff's assertion

The purpose of legislation of Article 104-3 of the Income Tax Act which provides for the heavy taxation of land for non-business purposes is to prevent speculation of land, to effectively utilize land, and to exclude land purchased by consultation or expropriated pursuant to the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor and other Acts, and Article 168-14 (3) 3 of the Enforcement Decree of the same Act from the non-business land. According to Article 47 of the National Land Planning and Utilization Act, if an urban planning facility project on the installation of urban planning facility is not implemented within 10 years from the date of public announcement of the determination of the urban planning facility project, the owner of land, the land category of which is the site of the urban planning facility project, may request the Special Metropolitan City Mayor, the Metropolitan City Mayor, or the head of Si/Gun to sell the land for non-business purposes, and the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor for Land for Public Works Projects for a long period of time without any special provision on the above request for purchase, purchase procedure, etc.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Therefore, Article 104 (1) 2-7 of the Income Tax Act (amended by Act No. 9270 of Dec. 26, 2008; hereinafter the same) provides that the heavy taxation rate of 60% shall apply to land for non-business use. In this regard, Article 104-3 (1) 4 and (2) of the Income Tax Act, Article 168-14 (3) 3 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 21025 of Sep. 22, 2008; hereinafter the same) provides that the land purchased by consultation or expropriated pursuant to the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and other Acts shall be excluded from the land for non-business use, if the project approval date falls under the land before December 31, 2006, the owner of the land shall be excluded from the land for which he/she purchased urban planning facilities within 10 years from the date of the public announcement of urban planning facility plan.

(2) The interpretation of tax laws and regulations is prohibited in accordance with the law, barring any special circumstance. It is also consistent with the principle of fair taxation if it is clearly viewed as preferential provisions among the requirements for reduction and exemption. (See, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003). It is difficult to expand or analogically interpret Article 168-14(3)3 of the Enforcement Decree of the Income Tax Act, which is the provision excluding non-business land, as it does not exist in the form of 7/10 of the Act on Special Measures for the Purchase of Land, etc. for Public Works and the Act on Special Measures for the Acquisition of Land, etc. for Public Works and the Compensation Therefor and the Act on the Acquisition of Land, etc. for Public Works Projects and the Act on Special Measures for the Acquisition of Land, etc. for the Acquisition of Land, etc. for which the owner of an urban planning facility is not subject to 3/10 of the Act on Special Measures for the Purchase of Land, etc.

(3) Therefore, the Defendant’s disposition of this case, which concluded as above, is legitimate, and the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case seeking the revocation of the disposition of this case is without merit, and this case is dismissed. It is so decided as per Disposition.